Tennessee Senate Bill SB0120

Tennessee 2023-2024 Regular Session

• Introduced: 1/11/23

Caption

AN ACT to amend Tennessee Code Annotated, Title 56, Chapter 4, Part 2, relative to a premium tax credit for examination charges, fees, and expenses.

Impact

The passage of SB0120 is expected to have a significant impact on the financial practices of insurance companies in Tennessee. By allowing a tax credit for examination fees, insurers will have greater flexibility in managing their tax burdens, potentially improving their bottom lines. This could lead to increased investment in the state insurance market as firms seek to take advantage of the new credits. However, this shift in financial responsibility could also lead to lower state revenues from premium taxes if a substantial number of insurers claim the credits.

Summary

Senate Bill 120 (SB0120) aims to amend Tennessee's insurance code by establishing a premium tax credit for examination charges, fees, and expenses incurred by insurance companies operating in the state. This legislation is designed to provide a more favorable tax environment for insurers by allowing them to offset certain costs associated with regulatory examinations against their premium tax liabilities. The bill specifies that only charges incurred on or after January 1, 2023, will be eligible for this tax credit, creating a forward-looking financial incentive for insurance companies.

Sentiment

The sentiment surrounding SB0120 has been generally positive among lawmakers and insurance industry advocates. Proponents argue that the bill supports a vital industry that plays a critical role in the state's economy, suggesting that the tax relief will encourage growth and competitiveness in the insurance sector. However, there are concerns about the long-term impact on state revenue, particularly if the projected tax credits significantly reduce the income derived from premium taxation. Critics may view the bill with skepticism, questioning if the financial benefits to the insurance industry justify potential decreases in tax revenues.

Contention

Notable points of contention surrounding SB0120 include discussions about the implications of reducing state revenue through tax credits specifically intended for the insurance sector. Some legislators and public policy advocates are concerned that the bill may disproportionately benefit larger insurers while not addressing the needs of smaller companies or consumers. Additionally, the restriction of the credit to expenses incurred only after January 1, 2023, raises questions about retroactive impacts on companies that may have already incurred such costs prior to this date, potentially leaving them at a disadvantage.